Natural gas E&P player EnCana
What the sale means for shareholders
Proceeds from the sale are expected to enhance EnCana's financial position. The company currently owns a debt-to-capitalization ratio of 33% and has close to $1 billion in debt maturities due by the first quarter of 2012. This step will also help the company to generate cash flow substantially higher than the $4.4 billion recorded in 2010. The move won't hurt EnCana's ability to pay a stable dividend to the shareholders, either; the company currently yields a solid 3.3%.
It certainly seems like EnCana stands to gain quite a bit from this sale -- if and when the property sells.
How much is that shale play in the window?
EnCana expects the low-end sales figure to be about $19,000 an acre, which is on par with Range Resources'
Company |
Barnett Shale Acreage |
---|---|
EnCana |
52,000 |
Devon Energy |
630,000 |
Chesapeake Energy |
220,000 |
EOG Resources |
175,000 |
Source: Annual reports.
If EOG Resources takes an interest in the EnCana property, it can pull right up alongside Chesapeake's stake.
Alternatively, though the EnCana property is paltry compared to its overall acreage, Devon Energy has mastered making the most out of its land. The company's horizontal drilling expertise has already resulted in an unheard-of 31 wells on a mere 12 acres of land.
Bottom line
This sale is subject, of course, to an acceptable bid. EnCana spent almost a year in negotiations with Petrochina
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